Rockport City Council Budget Workshop - March 24, 2026

This workshop, held on March 24, 2026, from 1:00 PM to approximately 4:00 PM at Rockport City Hall, focused on three major agenda items: a presentation and discussion on water/wastewater studies and rates, a review of the City Council's strategic plan, and a discussion on proposed changes to the Hotel Occupancy Tax (HOT) grant program. The meeting included presentations from San Patricio Municipal Water District (SPMWD) General Manager Brian Williams, rate consultant Dan Jackson, Texas Municipal League General Counsel Bill Longley, and city staff. No formal votes were taken, but council provided direction on several items.

Public Comments & Testimony

• No members of the public spoke during the Citizens to Be Heard portion of the meeting.

Discussion Items

• Water/Wastewater Studies and Rates: Brian Williams presented an update on the severe drought, noting that Choke Canyon Reservoir is at 8% capacity, Lake Corpus Christi at 9.1%, and Lake Texana at 52.7%. He warned that a Level One emergency (180 days before supply fails to meet demand) could be declared as soon as May 2026 under a worst-case scenario. Rockport's water consumption dropped 22% in 2025 to 2.45 million gallons per day. Williams outlined SPMWD's efforts to drill brackish water wells (estimated $1 million per well) and discussed the potential for significant rate increases from Corpus Christi, which could raise the raw water cost from $1.36 per thousand gallons to over $6.36. Dan Jackson presented two rate plan alternatives: Alternative A (status quo with four percentage increases) and Alternative B (a pass-through rate that isolates SPMWD's costs). Jackson noted that a 5,000-gallon residential customer currently pays $97.33/month; under Alternative B, the bill would increase by about $6.38 in the first adjustment. Council members expressed support for Alternative B due to its transparency and ability to automatically pass through SPMWD rate changes. However, Councilmember Hattman requested delaying the initial April rate increase by using approximately $1 million from the natural gas system sale proceeds to subsidize the water fund until October. Staff was directed to bring back detailed financial analysis and consider another workshop before any formal action.
• Strategic Plan Review: City Manager Vanessa Shrauner led a review of the 2025 strategic plan, covering mission, vision, values, infrastructure, finance, recreation, economic development, customer service, health and safety, and vision breakdown items. Key updates included: the city has achieved the 180-day reserve target thanks to the gas system sale; staff will continue exploring a healthcare tax use (half-cent sales tax sent to the county); and the city is allowing xeriscaping in new developments to conserve water. Council discussed the need for sidewalks on Pearl Street and agreed to explore using health care tax funds or grants for that purpose. No major changes were made to the plan.
• Hotel Occupancy Tax Discussion: Bill Longley explained the legal framework for HOT expenditures (Chapter 351 of the Tax Code), emphasizing the two-step test: the expenditure must promote tourism and the hotel industry, and it must fit within one of nine statutory categories. Shelley Goodwin presented proposed changes to the city's HOT grant program, including a new application portal, use of room blocks or promo codes to verify hotel stays, a three-year maximum funding formula (decreasing each year), and a city preview team for applicant presentations. Councilmembers asked questions about verification methods for the first year and the requirement to disclose all other funding sources (which staff agreed to remove). No final decision was made; council will take the materials home for further review and discussion at a future meeting.

Key Outcomes

• Water Rates: Council directed staff to prepare information on using approximately $1 million from gas sale proceeds to delay the proposed April rate increase until October, and to bring back a detailed analysis of how that would affect the water fund and the general fund. Staff will also schedule a follow-up workshop to refine the rate plan before bringing an action item to a regular council meeting.
• Strategic Plan: The strategic plan will be updated to reflect the achievement of the 180-day reserve goal and to incorporate new priorities such as Pearl Street sidewalks. Staff will continue exploring the healthcare tax use and bring back a proposal.
• Hotel Occupancy Tax Program: Council will review the proposed program changes (application, scoring sheet, timeline) and provide further direction at a future workshop. Staff will refine the program based on council feedback, including removing the requirement to disclose all other funding sources.